The Fuse
What are futures doing?
Equity futures are slightly higher but mostly quiet, off their overnight highs. We have a three day weekend upon us and usually in the afternoon things settle in. The fireworks might ignite at the start of the trading day but then calm down as volatility moves sharply.
News
A nice rise in Europe as the STOXX popped .5% led higher by gains in France and Germany. The FTSE also gained ground, up .3%, the US dollar bumped up .1%, gold and silver modestly lower. Crude oil is higher but just more than 2%. German bund yields are lower, off 4bps but 10 yr US treasury yields flat, in Japan more gains with Nikkei up 2.7%, Hong Kong and Shanghai with robust gains as well (.8% and .9% respectively).
Volatility
As we stand in front of another holiday weekend volatility should start to come in as vol sellers get active. They are looking to front-run the extra day off which is time decay. Stocks may just drift into the weekend.
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Interest Rates
Higher rates continue to be a problem but they were not yesterday, however only modest dips so far today across the term structure. 2/10 spread has halted its rise for now, junk yield spreads remain steady. Fed funds futures now seeing a 34% chance of a hike in September and a 60% chance of a hike in December! How things can change quickly.
Earnings
Very strong earnings and guidance from NVIDIA last night but the stock is not moving much, we expected that. Regardless, other names are benefitting from the guidance. Walmart hit the tape this morning and it looks like a beat, ELF had strong numbers yesterday. Deere is weaker after posting a strong report. Tonight Deckers, Take Two, Workday and Ross Stores.
Events
The bulls made a stand yesterday and refused to make it four down in a row. A solid effort with good statistics across the board but as usual some followthrough is necessary. Bears are looking for a retreat and with downbeat headlines they just might get it. As we head into a holiday weekend look for volatility to move lower by end of day Friday.
Breadth
A strong breadth day, first one in awhile gives the bulls a little breathing room. No doubt this indicator has been weak and showing trouble under the market, but at least for a day the bulls got a win. Oscillators still negative however and new lows are ahead of new highs.
Volume
Only two of the indices pulled off an accumulation day, the Industrials and small caps. Regardless, it was positive all the way around, the first sign that sellers had really stopped their distribution. Another couple of up days would go a long way.
Support Levels
Probing lower areas of support this week was a good thing, though it felt horrible. As the SPX 500 and Nasdaq move higher it means larger incremental moves, which can be disturbing. Nonetheless, the dip buyers came in heavy Wednesday and managed a strong finish. Followthrough again is needed for this one day move to stick.
The Internals
Not the best day but far off the worst levels of the session. That big reversal midday also turned the internals upside down. The VOLD shot higher as shorts were squeezed, same with the ADD. VIX took a tumble as we mentioned yesterday might be the case, ticks were heavy red early and heavy green late in the day. Put/calls remain tame. Today could be an important session.
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The Dynamite
Earnings This Week:
- Monday:BIDU, BRC, YOYO, AGYS, FATM
- Tuesday:HD, VRT, AS, MMYT, RDCM, LUXE, HSAI, CRNT, KEYS, CAVA, TOL AUNA, CO, RRGB, XELO, EGHT
- Wednesday:ADI, ZIM, VFC, TGT, LOW, ARCO, HAS, GOS, TJX, PERI, NVDA, ELF, INTU, SBLK, URBN, STEP, NDSN, BLTE, ENS;
- Thursday:NIO, WMT, DE, ADS, LSPD, AAP, DAVE, RL, NETS, DECK, BULL, WDAY, ZM, TTWO, CPRT, FLOW, ROST, RAMP, LION
- Friday:BAH, BJ
Economic Data this week:
- Monday:fed speak
- Tuesday:pending home sales and more fed speak
- Wednesday:minutes of the fed meeting
- Thursday:Jobless claims, housing starts, building permits, Philly fed, flash PMI
- Friday:consumer sentiment, leading economic indicators
Fed Watch:
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Stocks to Watch
Oil Prices – We saw a big rise this week and close at recent highs, there is concern the Iran War is going to scale up even more. Too much uncertainty abounds.
Retail – Sales last month were pretty good, but many retailer charts have fallen back. However, Walmart, Target are looking chipper, but Home Depot and Lowes looking pretty weak here. We’ll hear from Deckers, BJ’s and Hasbro along with TJX.
NVIDIA – The massive chip company reports on Wednesday and may provide some relief to the rest of the tech sector. Expecting strong numbers but the stock may not move too much, it may have had its run already.
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